Magazine article American Banker

Tex. Payday Lender First Cash Acquires Auto Master of Ark

Magazine article American Banker

Tex. Payday Lender First Cash Acquires Auto Master of Ark

Article excerpt

First Cash Financial Services Inc., a pawn and payday lender in Arlington, Tex., has acquired Auto Master, an automotive retailer and finance company based in Springdale, Ark.

The $33.7 million purchase was funded through cash, First Cash's credit facility, and notes. It closed Friday and was announced Monday.

Auto Master owns eight so-called buy-here/pay-here dealerships in Arkansas, Missouri, and Oklahoma, specializing in used cars. Buy- here/pay-here dealerships extend credit directly to consumers rather than through a separate finance company.

Daniel T. Fannon, an analyst with Jefferies & Co. in San Francisco, said Auto Master complements First Cash well.

The acquisition "provides another growth aspect" for First Cash, Mr. Fannon said. He maintained his "buy" rating on First Cash shares, which were trading at $19.67 Tuesday morning, up 10.8% from Friday's close.

Auto Master reported revenue of $44 million, for its 2005 fiscal year and projects revenue of $53 million to $55 million for fiscal 2006.

Because of the acquisition, First Cash boosted its 2006 earnings guidance, previously 94 to 95 cents a share, to 96 to 97 cents. Including the projected accretive earnings from Auto Master, it is initiating guidance for 2007 in a range of $1.25 to $1.30 per share, which would top the upper end of the revised 2006 guidance by 29% to 34%.

Rick Wessel, vice chairman of the First Cash board, said in Monday's press release announcing the acquisition, "We intend to accelerate this business through our financial, strategic, and technology resources. …

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